How government plans to raise Sh20 trillion through PPP plan

 

By Josephine Christopher

Josephine Christopher is a business reporter for The Citizen and Mwananchi newspapers.

Mwananchi Communications Limitted

Summary

·         Targets for private sector support through PPP projects are guided by the third National Five-Year Development Plan (FYDP III; 2021/22-2025/26).

Dar es Salaam. The government said yesterday its ambitious plan to mobilise $9 billion (Sh20 trillion) in capital through public-private partnerships (PPPs) by 2025/26 is

still achievable.

The success of this alternative financing strategy will be assured by establishing the necessary instruments, capacity building and collaboration with partners.

Targets for private sector support through PPP projects are guided by the third National Five-Year Development Plan (FYDP III; 2021/22-2025/26).

The PPPs commissioner in the Ministry of Finance and Planning, Mr David Kafulila, highlighted five key solutions which could facilitate the attainment of that goal by the government.

He was speaking during the opening of a five-day workshop on developing a sector PPP project pipeline.

Mr Kafulila said the government will first be required to change approach and align with the private sector expectations.

“We need to back our projects with solid assessments and accurate figures to negotiate fair deals and obtain value for money,” he said.

While he agreed that the country was currently unable to do it independently, Mr Kafulila said it would be advisable to seek the assistance of credible firms to support the preparation of projects.

“They can help us prepare projects while simultaneously building our internal capacity to retain this expertise within our institutions.

“We also need to audit our financial models for probity and assurance that the numbers we will negotiate are correct and have valid assumptions.”

Mr Kafulila also advised that the government would need to set aside a substantial amount for project preparations as well as create projects that are bankable.

“Project preparation requires significant investments, estimated at 2-5 percent of the project cost. Creating bankable projects it will require a clear understanding of sector dynamics and international best practices in PPP development and delivery,” said Mr Kafulila.

The government's goal of attracting more private capital is also backed by President Samia Suluhu Hassan's agenda on economic reforms and transformations.

Finance and Planning deputy permanent secretary ( Treasury Services) Jenifa Omolo said while the government targets are set at a significant amount of money, a coordinated and consistent approach to PPPs, with a robust pipeline of projects of utmost importance.

She said the government will continue to amend the legal frameworks as well as create a more conducive environment for attracting private sector capital.

“We also recognise the urgent need to establish the PPP Centrr and its operating instruments, including the PPP Facilitation Fund and Operational Guidelines,” said Ms Omolo.

The deputy PS added that PPPs offer an excellent opportunity to harness the resources and expertise of the private sector, as through partnering with private entities, the country can tap into the capital, technology, and knowledge to provide the essential infrastructure and services it needs.

“PPPs can unlock new economic growth and development opportunities, improve quality of life, and foster a more sustainable future,” she said.

According to the FYDP III; 2021/22 – 2025/26, the Government has taken steps to enhance private sector participation in Public-Private Partnership (PPP) by strengthening the applicable legal and institutional frameworks.

To this end, it has amended the Public-Private Partnership Act, CAP. 103 to provide for better supervision and coordination of PPP projects. Additionally, it has reinforced the institutional structure for overseeing the PPP Program, placing it under the Ministry of Finance and Planning in order to speed up the approval process.

Other initiatives include recapitalisation of the Tanzania Investment Bank and establishing a window for long-term finance in the Tanzania Agricultural Development Bank (TADB).